Homeowners: Don't "over renovate": in flatter sales environment

Sellers face a very competitive market in 2015:We have excess listing inventory and sellers also face fierce competition from new construction inventory from builders. This has resulted in buyer’s market conditions with significant price pressure and minimal average price increases compared to our long bull market from 2000-2011.

Reno cost does not increase market value on a 1:1 basis:

Many homeowners invest significant sums in reno’s, upgrades and additions to their homes and often believe that this should be 100% recouped in market value at selling time. Even the best reno’s (flooring, kitchens, bathrooms and painting) and upgrades only return 50%-75% and many return far less than that.

Over improvement or super adequacy will overprice a home:In real estate we use these terms to describe properties that have had too many costly or inappropriate reno’s added and therefore overpricing the house for the neighbourhood. These homes end up suffering from the “highest price on the street” syndrome and buyers are harder to find. These homes often take a much longer time to sell and also typically end up being sold below the sellers’ initial price expectation.

Previous seller’s market covered excess investment:Seller’s market conditions help cover this excess investment but now that we are in a flatter buyers’ market, such over spending will probably not be recouped at selling time.

Call your REALTOR®!If you are thinking of significant upgrades or renovation investments, call your Realtor as a part of the process and get their opinion on the proposed upgrades and investment level. After all, when you go to sell the house, you will be asking the Realtor to get the home sold for you and they will have a good perspective as to the market value and timing of proposed reno’s or upgrades.

Too often homeowners listen to the reno sales guy or tradesman about how much “market value” they are adding…but these are not the folks who are going to sell your house for you when the time comes.

If you do not have a Realtor for your reno advisory team by all means give us a call and we would be happy to provide assistance or suggestions. 613-371-9691